What is Stellar: the "people's" cryptocurrency that IBM promotes
Stellar presents itself as the "future of banking" and aims to become a decentralized payment system for transferring money from country to country and from currency to currency. At the same time, Stellar has no plans to go to war with the existing centralized financial structures. He intends to make a revolution in the world of payments peacefully - by concluding partnerships with central banks and integrating crypto currencies into the existing financial ecosystem. Check xlm price prediction to bebin invest in it.
However, one difficult war for the existence of Stellar still has to be won. In order for central banks to want to deal with him, he needs to become better than Ripple, in the image of which Stellar was once created by cloning and which still looks weaker.
In order to fight against Ripple and other competitors, Stellar uses technology - a working and already beneficial blockbuster, as well as one very powerful ally - the technological giant IBM. There are also populist slogans like "95% of tokens will be given to people for free", as well as the title of "non-profit charity".
Both Stellar and Ripple are eager to occupy the place, which is now occupied by the payment system SWIFT, which unites all financial institutions in the world with a single network. Ripple, at first glance, has more powerful blockchains, more influential allies, and the funding is much better, but the support of a wide range of users who prefer Stellar can play a decisive role.
The balance of power that emerged reminds us of the pre-revolutionary situation in Tsarist Russia in 1916. The creators of Stellar look like poor, small and unpopular Bolsheviks, while the developers of Ripple look like a wealthy liberal bourgeoisie. Both forces are actively arming and recruiting supporters to overthrow the monarch - SWIFT and take his throne. However, as soon as they succeed, there will almost certainly be a "civil" war, the winner of which is not obvious. That is why those investors who believe in the blockchain revolution in the banking market are pouring money into both Ripple and Stellar in order to insure the other with one bet.
An advanced idea at the heart of Stellar
Stellar wants ordinary banks with their cash registers, terminals and ATMs to become "gateways" for its blockchain, through which people can comfortably enter and withdraw money. And within the decentralised system, money can fly from account to account in 2-5 seconds and/or automatically transfer to another currency.
For example, if an entrepreneur from Ukraine who has only 300 hryvnias needs to transfer $10 to a supplier's account in the U.S., he will be able to make this transfer to Stellar or Ripple in one go, without the hassle of opening a currency account and without having to wait for the completion of exchange of hryvnias into dollars. He will be helped by an "anchor" - a bank, payment service or other reliable intermediary that stores and converts hryvnias and is connected to Stellar. By placing 300 hryvnias on the deposit of the favorite "anchor", the Ukrainian entrepreneur will be able to immediately get a digital loan of $10 from him and instantly credit these dollars to the account of the supplier in the USA. And for the "anchor", which received 300 UAH, the Stellar system will prompt the most advantageous buying rate of $10 on its stock exchange. After purchasing dollars, the "anchor" will be able to return the hryvnia change to the sender, deducting the commission for its services.
What role in the system is assigned to internal crypting? Lumen - Stellar tokens - will be needed to pay minuscule commissions (about $0.000001 per transaction) and are designed to build bridges. That is, if someone needs to exchange hryvnia for Zimbabwean dollars, but there is no direct market between these two assets, then you can buy lumens for hryvnia, and then buy the required dollars for lumens.
"People's version of Ripple."
The launch of Stellar in 2014 was scandalous and painful for Ripple. One of the founders of Ripple, Jed McCaleb, loudly criticized the system for being centralized, hiding the source code and operating as a greedy corporation seeking to make as much money as possible from selling XRP tokens. McCaleb's public announcement of his intention to get rid of his 9 billion XRP tokens has resulted in Ripple tokens collapsing 40% in one day on May 22, 2014. The conflict in which Ripple developers froze McCaleb's funds caused their project reputational damage. This precedent of self-policing has disappointed many crypto investors, demonstrating how a centralized organization can block things it doesn't like without consulting someone.
Jed McCaleb cloned Ripple at Stellar, announcing that his new project was rid of the shortcomings of the old one, and that it would serve not the mercantile interests of a group of investors, but the bright altruistic goal of connecting "people to budget banking services for poverty reduction and human development". Some 2 billion people in the world do not have access to banking services, and Stellar is able to give them access to microcredit and micropayments.
The development of Stellar was entrusted to the U.S. registered non-profit organization Stellar Development Foundation (SDF), which took initial capital ($3 million) on credit from technology company Stripe, and subsequently repaid the debt in crypt currency. Stripe received 2% of the 100 billion lumens issued.
Developers of the SDF in 2015 transferred Stellar to the new Stellar Consensus Protocol, and by 2017 rewrote almost all of the software code and announced that Stellar is no longer a Ripple fork, and it should be considered unique. Moreover, at the end of 2017 Stellar entered a technological breakthrough, starting to implement the advanced technology of scaling Lightning Network and master the sphere of smart contracts, where Ethereum dominates, and where the foot of Ripple has not yet stepped.
Smart contracts are computer programs that verify whether the participants have met all the conditions of the transaction and, if so, automatically distribute the assets. Stellar, unlike Ethereum, has limited the ability to create smart contracts in its network, but provided them with better protection against hacker attacks. Offering faster transaction confirmation (5 seconds vs. 3.5 minutes with Ethereum) and promising high throughput (3000 transactions per second vs. 7 transactions per second with Ethereum), Stellar has become an attractive ICO platform. In January 2018, Mobius Network proved this by successfully launching its Decentralized Application Store at Stellar and raising $39 million by selling its tokens for lumens.
According to SDF, Stellar's smart contracts support multi-signatures (checking which members must validate the transaction and which keys they must enter), grouping/atomization (the ability to include a group of transactions in a single transaction, and the ability to cancel the entire group if any of the transactions are rejected), sequence (sequential numbers that ensure that certain transactions will not start before the previous ones) and time limits (time limits beyond which a transaction cannot be executed).
The most amazing difference between Stellar and Ripple is the principle of lumen distribution. The developers of Stellar, just like Ripple Labs, refused to involve miners. The whole money supply - 100 billion XLM they released at once and got it at their disposal. However, unlike Ripple developers who sell tokens in small batches, the SDF promised to give away all the lumens for free, leaving only 5% for operating expenses. 20 billion XLM is to be distributed among Ripple bitcoin and token holders. Another 25 billion XLMs are to be distributed to non-profit organizations. And 50 billion XLM is to be distributed in small steps to as many people as possible.
Path to recognition
No major bank, let alone Stellar central bank, has yet agreed on cooperation. However, in 2017 dozens of payment systems wished to become "anchors" and created several rather wide transatlantic channels for money transfer.
For example, Tempo, a money transfer service based in France, formed a financial corridor through Stellar with Philippine Coins.ph. Since mid-2017, Filipinos working in Europe can send the euro to any relative's home country by giving their name and mobile number. Within 5 minutes after sending the money will arrive at its destination in Philippine pesos. The recipient will see the notification of their arrival on his or her phone and, using an account at Coins.ph, which will be created automatically, will be able to take them to a Filipino bank, order cache delivery at home, or pick up the cash by hand. Stellar transfers millions of pesos (tens of thousands of euros) from Europe to the Philippines every day in this way.
In addition to Tempo, Stellar has become or is preparing to become SatoshiPay and EXCH.one in Europe, B&T Corredora and Remitr in America, Bahrain Finance Company in the Persian Gulf, KlickEx and Novatti in Australia and South Pacific, SureRemit, Flutterwave in Africa.
Stellar took a big step towards its cherished goal of cooperating with central banks on October 16, 2017, by concluding a partnership with technology giant IBM. In a press release, IBM said it would use Stellar to reduce the cost and speed up its financial transactions, as well as create its own multi-currency money transfer blockcheck over Stellar, through which "a Samoan farmer will be able to conclude a trade contract with a buyer in Indonesia.
In March this year, Jesse Land, IBM's vice president, made a surprise announcement to crypto investors that the corporation does not plan to produce its own tokens, as it is satisfied with Stellar's domestic currency. IBM, as it was announced, itself uses lumens as "fuel" and "intermediate asset" for cross border transactions, as well as promotes XLM among its clients and "aggressively" convinces financial companies to create digital assets (e-money, digital currencies and digital gold) on the Stellar block. Jesse Land said the world is "very close" to seeing central banks one by one produce their own crypto currencies. And that Stellar has a "very good chance" of becoming the habitat of these crypto currencies.